Arcadia Biosciences Announces Fourth-Quarter and Full-Year 2015 Financial Results and Business Highlights

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DAVIS, Calif. (March 8, 2016) – Arcadia Biosciences, Inc. (Nasdaq: RKDA), an agricultural technology company focused on generating higher yields and improving product quality in plants, today released its financial and business results for the fourth quarter and the full year ended December 31, 2015.

Revenues for the quarter were $1.3 million and for the year were $5.4 million, compared with $2.8 million for the fourth quarter and $7.0 million for the full year 2014. The decrease primarily reflected lower license revenues, as the fourth quarter of 2014 included a major milestone not replicated in the fourth quarter of 2015. Operating expenses for the full years of 2015 and 2014 included $596,000 and $1.7 million in non-cash inventory reserves, respectively, for the company’s GLA safflower oil product.

The company’s loss from operations for both the fourth quarter and the full year of 2015 was greater when compared with the loss from operations for the similar time periods in 2014. Lower revenues and increased operating expenses led to a loss from operations of $4.1 million in the fourth quarter, compared with $1.6 million for the same period in 2014. For the full year, loss from operations was $15.6 million in 2015 compared with a loss from operations of $15.2 million in 2014, as reduced operating expenses partially offset lower revenues for the year.

“While a major financial milestone was not recognized in 2015, we have made multiple advancements for our later-stage products that have the potential to lead to future milestone payments and, ultimately, to commercialization of our pipeline,” said Roger Salameh, interim president and CEO. “At the same time, we’re maintaining a consistent level of funding for R&D and SG&A to support our growth, while continuing to tightly manage expenses.

“We’re particularly pleased with the regulatory, commercial and intellectual property advancements we’ve made this year, and we continue to manage our pipeline to focus on those products and crops that create the greatest value for our grower customers, our commercial partners and our stockholders,” Salameh added.

Business and Technology Highlights

During the fourth quarter of 2015, Arcadia announced the following business and technical achievements:

  • December 2015 – Dow AgroSciences and Arcadia Biosciences Form Strategic Collaboration to Develop and Commercialize Corn Traits. Arcadia announced a strategic collaboration to develop and commercialize yield and stress traits and trait stacks in corn. The collaboration leverages Arcadia’s leading platform of abiotic stress traits with Dow AgroSciences’ enabling technology platforms, input traits, regulatory capabilities and commercial channels.
  • December 2015 – Arcadia Biosciences and BGI to Create Global Non-GM Genetic Resource for Rice. Arcadia and BGI, the world’s largest genomics organization, announced a collaboration to create an extensive rice genetic resource library to advance food crop research and development.
  • October 2015 – Field Trials Show Average Yield Increases of 19 Percent in Nitrogen Use Efficient Rice. Two years of field trials in Africa with leading lines of Nitrogen Use Efficient (NUE) rice demonstrated an average yield increase of 19 percent over the conventional control lines.
Arcadia Biosciences, Inc.
Financial Snapshot

(In thousands)
  Three Months Ended December 31   Nine Months Ended December 31
  2015 2014 % Favorable/
(Unfavorable)
  2015 2014 % Favorable/
(Unfavorable)
Total Revenues 1,346 2798 (52%)   5,414 6,982 (22%)
Total Operating Expenses 5,416 4,428 (22%)   20,977 22,135 5%
Loss From Operations (4,070) (1,630) (150%)   (15,563) (15,153) (3%)
Net Loss (3,857) (1,988) (94%)   (17,956) (18,339) 2%
Net Loss Attributable to Common Stockholders (3,857) (3,638) (6%)   (20,727) (22,077) 6%

Revenues

In the fourth quarter of 2015, revenues were $1.3 million as compared with revenues of $2.8 million in the fourth quarter of 2014, a 52 percent reduction. The quarter-over-quarter decrease was primarily driven by the timing of license revenues, as a significant financial milestone was achieved in 2014. For the full year of 2015, revenues decreased to $5.4 million from $7.0 million in 2014 primarily because of milestone achievement in 2014. Additionally, the company had lower revenues from contract research and government grants for the full year in 2015, partially offset by increased product revenues.

Operating Expenses

In the fourth quarter of 2015, operating expenses were $5.4 million, up from $4.4 million in the fourth quarter of 2014, a 22 percent increase. For the full year of 2015, operating expenses were $21.0 million compared with $22.1 million in 2014, a 5 percent improvement. A $1.7 million non-cash inventory reserve was booked in the third quarter of 2014 for the company’s GLA oil product, as compared with a $596,000 adjustment in the fourth quarter of 2015. For the fourth quarter and the full year 2015, lower research and development (R&D) spending was offset by higher selling, general and administrative (SG&A) expenses primarily associated with operating as a public company.

Net Loss

Net loss for the fourth quarter of 2015 was $3.9 million as compared with $2.0 million for the fourth quarter of 2014, a 94 percent quarter-to-quarter increase. Net loss for the full year 2015 was $18.0 million, a 2 percent improvement from the $18.3 million net loss in 2014. The net loss for 2015 included higher interest expense and a loss associated with the retirement of debt, while the 2014 loss included non-cash expenses associated with Arcadia’s Limagrain Cereal Seeds joint venture and adjustments to the value of financing-related derivatives.

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders for the fourth quarter of 2015 was $3.9 million, or a loss of $0.09 per share, a 6 percent increase from the $3.6 million loss in the fourth quarter of 2014. The net loss for the full year 2015 was $20.7 million, or a loss of $0.73 per share, a 6 percent improvement over the $22.1 million loss in 2014. The net loss attributable to common stockholders included significant non-cash adjustments associated with Series D financing redemption rights and deemed dividends to a warrant holder. The number of shares outstanding used to calculate the per-share losses attributable to common stockholders in 2015 is weighted and reflects the company’s IPO in May 2015.

Conference Call and Webcast

The company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, March 8, to discuss fourth-quarter and annual results and key strategic achievements.

Interested participants can join the conference call using the following numbers:

U.S. Toll-Free Dial-In: +1-855-546-9560
International Dial-In: +1-412-455-6124
Passcode: 50115878

A live webcast of the conference call will be available on the “Investors” section of the Arcadia’s website at www.arcadiabio.com. Following completion of the call, a recorded replay will be available on the company’s investor website.

Safe Harbor Statement

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release and the accompanying conference call contain forward-looking statements about the company and its products, including statements relating to components of the company’s long-term financial success; the company's traits, commercial products, and collaborations; and the company’s ability to manage the regulatory processes for its traits and commercial products. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to: the company’s and its partners’ ability to develop commercial products incorporating its traits and to complete the regulatory review process for such products; the company’s compliance with laws and regulations that impact the company’s business, and changes to such laws and regulations; and the company’s future capital requirements and ability to satisfy its capital needs. Further information regarding these and other factors that could affect the company’s financial results is included in filings the company makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and additional information that will be set forth in its Form 10-K for the year ended December 31, 2015. These documents are on the SEC Filings section of the “Investors” section of the company’s website at www.arcadiabio.com. All information provided in this release and in the attachments is as of the date hereof, and Arcadia Biosciences, Inc. undertakes no duty to update this information.

About Arcadia Biosciences, Inc.

Based in Davis, Calif., with additional facilities in Seattle, Wash. and Phoenix, Ariz., Arcadia Biosciences (Nasdaq: RKDA) develops agricultural products that create added value for farmers while benefitting the environment and enhancing human health. Arcadia’s agronomic performance traits, including Nitrogen Use Efficiency, Water Use Efficiency, Salinity Tolerance, Heat Tolerance and Herbicide Tolerance, are all aimed at making agricultural production more economically efficient and environmentally sound. Arcadia’s nutrition traits and products are aimed at creating healthier ingredients and whole foods with lower production costs. The company was previously listed in the Global Cleantech 100 and has been named one of MIT Technology Review's 50 Smartest Companies. For more information, visit www.arcadiabio.com.

Arcadia Biosciences, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)  

As of December 31,

 

 

2015

 

2014

 

Assets

(unaudited)   (audited)  

Current assets:

           

Cash and cash equivalents

$

23,973

 

$

16,571

 

Short-term investments

 

26,270

   

 

Accounts receivable

 

706

   

1,042

 

Unbilled revenue

 

82

   

380

 

Inventories — current

 

294

   

424

 

Prepaid expenses and other current assets

 

692

   

278

 

Total current assets

 

52,017

   

18,695

 

Property and equipment, net

 

585

   

728

 

Inventories — noncurrent

 

1,867

   

2,149

 

Cost method investment

 

   

500

 

Long-term investments

 

19,748

   

 

Other noncurrent assets

 

25

   

2,817

 

Total assets

$

74,242

 

$

24,889

 

Liabilities, redeemable and convertible preferred stock and stockholders’ equity

(deficit)

           

Current liabilities:

           

Accounts payable and accrued expenses

$

2,423

 

$

3,197

 

Amounts due to related parties

 

19

   

56

 

Promissory notes — current

 

   

1,055

 

Convertible promissory notes

 

   

4,551

 

Unearned revenue — current

 

1,008

   

830

 

Derivative liabilities related to convertible promissory notes

 

   

1,580

 

Total current liabilities

 

3,450

   

11,269

 

Notes payable

 

24,930

   

 

Note payable to related party

 

   

8,000

 

Promissory notes — noncurrent

 

   

869

 

Unearned revenue — noncurrent

 

2,637

   

3,636

 

Other noncurrent liabilities

 

3,000

   

3,000

 

Total liabilities

 

34,017

   

26,774

 

Redeemable convertible preferred stock, no par value—0 and 10,553,770 shares

authorized as of December 31, 2015 and December 31, 2014; 0 and 9,587,764 issued

and outstanding as of December 31, 2015 and December 31, 2014

 

   

34,098

 

Convertible preferred stock, no par value—0 and 94,586,346 shares authorized as of

December 31, 2015 and December 31, 2014; 0 and 23,385,029 issued and outstanding

as of December 31, 2015 and December 31, 2014

 

   

48,783

 

Stockholders’ equity (deficit):

           

Preferred stock, $0.001 par value—20,000,000 and 0 shares authorized as of

December 31, 2015 and December 31, 2014; no shares issued and outstanding as

of December 31, 2015 and December 31, 2014

 

   

 

Common stock, $0.001 par value—400,000,000 and 140,000,000 shares authorized

as of December 31, 2015 and December 31, 2014; 44,184,195 and 2,074,030

shares issued and outstanding as of December 31, 2015 and December 31, 2014

 

44

   

 

Additional paid-in capital

 

172,222

   

29,204

 

Accumulated deficit

 

(131,926

)

 

(113,970

)

Accumulated other comprehensive loss

 

(115

)

 

 

Total stockholders’ equity (deficit)

 

40,225

   

(84,766

)

Total liabilities, redeemable and convertible preferred stock and stockholders’ equity (deficit)

$

74,242

 

$

24,889

 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

 

Three Months Ended
December 31,

 

 

Years Ended
December 31,

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(audited)

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Revenues:

                               

Product

 

$

83

   

$

89

   

$

466

   

$

355

 

License

   

443

     

1,863

     

1,216

     

2,325

 

Contract research and government grants

   

820

     

846

     

3,732

     

4,302

 

Total revenues

   

1,346

     

2,798

     

5,414

     

6,982

 

Operating expenses:

                               

Cost of product revenues

   

669

     

65

     

892

     

1,997

 

Research and development

   

1,869

     

2,070

     

8,966

     

10,012

 

Selling, general and administrative

   

2,878

     

2,293

     

11,119

     

10,126

 

Total operating expenses

   

5,416

     

4,428

     

20,977

     

22,135

 

Loss from operations

   

(4,070

)

   

(1,630

)

   

(15,563

)

   

(15,153

)

Interest expense

   

(650

)

   

(346

)

   

(2,658

)

   

(1,394

)

Other income (expense), net

   

897

     

16

     

521

     

(597

)

Loss on extinguishment of debt

   

(230

)

   

     

(230

)

   

 

Net loss before income taxes and equity in loss of

unconsolidated entity

   

(4,053

)

   

(1,960

)

   

(17,930

)

   

(17,144

)

Income tax benefit (provision)

   

196

     

(28

)

   

(26

)

   

(263

)

Equity in loss of unconsolidated entity

   

     

     

     

(932

)

Net loss

   

(3,857

)

   

(1,988

)

   

(17,956

)

   

(18,339

)

Accretion of redeemable convertible preferred stock to redemption value

   

     

(1,650

)

   

(2,574

)

   

(3,738

)

Deemed dividends to warrant holder

   

     

     

(197

)

   

 

Net loss attributable to common stockholders

 

$

(3,857

)

 

$

(3,638

)

 

$

(20,727

)

 

$

(22,077

)

Net loss per share attributable to common stockholders:

                               

Basic and diluted

 

$

(0.09

)

 

$

(1.76

)

 

$

(0.73

)

 

$

(10.71

)

Weighted-average number of shares used in per share calculations:

                               

Basic and diluted

   

44,110,791

     

2,070,051

     

28,559,119

     

2,061,278

 

Other comprehensive loss, net of tax

                               

Unrealized losses on available-for-sale securities

   

(115

)

   

     

(115

)

   

 

Other comprehensive loss

   

(115

)

   

     

(115

)

   

 

Comprehensive loss attributable to common stockholders

 

$

(3,972

)

 

$

(3,638

)

 

$

(20,842

)

 

$

(22,077

)

 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Years Ended December 31,

 

 

 

(unaudited)

 

 

(audited)

 

 

 

2015

 

 

2014

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net Loss

 

$

(17,956

)

 

$

(18,339

)

Adjustments to reconcile net loss to cash used in operating activities:

               

Depreciation and amortization

   

294

     

358

 

(Gain)Loss on disposal of equipment

   

(10

)

   

3

 

Net amortization of investment premium

   

85

     

 

Payment of research and develop fees with cost investment

   

500

     

 

Equity in loss of unconsolidated entity

   

     

932

 

Loss related to amendment of Bioceres funding agreement

   

     

1,450

 

Stock-based compensation

   

1,392

     

976

 

Common stock warrants issued for services

   

     

93

 

Change in fair value of derivative liabilities related to convertible promissory notes

   

9

     

611

 

Gain on expiration of warrant and derivative liability related to notes payable upon IPO

   

(437

)

   

 

Accretion of debt discount

   

837

     

468

 

Loss on extinguishment of debt

   

230

     

 

Changes in operating assets and liabilities:

               

Accounts receivable

   

336

     

(393

)

Amounts due from related parties

   

     

100

 

Unbilled revenue

   

298

     

(105

)

Inventories

   

412

     

412

 

Prepaid expenses and other current assets

   

(415

)

   

(27

)

Other noncurrent assets

   

49

     

8

 

Accounts payable and accrued expenses

   

125

     

(216

)

Amounts due to related parties

   

(37

)

   

(140

)

Unearned revenue

   

(821

)

   

(978

)

Net cash used in operating activities

   

(15,109

)

   

(14,787

)

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Cost method investment

   

     

(1,450

)

Proceeds from sale of property and equipment

   

10

     

7

 

Purchases of property and equipment

   

(151

)

   

(148

)

Purchases of investments

   

(48,719

)

   

 

Proceeds from sales of investments

   

2,500

     

 

Net cash used in investing activities

   

(46,360

)

   

(1,591

)

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Proceeds from issuance of common stock upon IPO

   

68,227

     

 

Payments of IPO issuance costs

   

(8,205

)

   

(1,594

)

Proceeds from issuance of notes payable

   

45,000

     

 

Payments of debt issuance costs

   

(396

)

   

 

Payments of debt extinguishment costs

   

(1,319

)

   

 

Proceeds from exercise of stock options

   

360

     

19

 

Proceeds from issuance of redeemable convertible preferred stock and common stock warrants, net of issuance costs

   

     

32,845

 

Payments on notes payable to related party

   

(8,000

)

   

 

Payments on notes payable and convertible promissory notes

   

(26,796

)

   

(1,084

)

Capital lease payments

   

     

(72

)

Net cash provided by financing activities

   

68,871

     

30,114

 

Net increase in cash and cash equivalents

   

7,402

     

13,736

 

Cash and cash equivalents — beginning of period

   

16,571

     

2,835

 

Cash and cash equivalents — end of period

 

$

23,973

   

$

16,571

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

               

Cash paid for interest

 

$

2,050

   

$

736

 

Cash paid for income taxes

 

$

149

   

$

103

 

NONCASH INVESTING AND FINANCING ACTIVITIES:

               

Accretion of redeemable convertible preferred stock

 

$

2,574

   

$

3,738

 

Debt issuance costs included in accounts payable and accrued expenses

 

$

46

   

$

 

Deferred offering costs included in accounts payable and accrued expenses

 

$

   

$

1,165

 

Reclassification of deferred IPO costs to equity

 

$

5,022

   

$

 

Deemed dividend to common stock warrant holder

 

$

197

   

$

 

Issuance of warrants and derivatives in connection with notes payable issuance

 

$

437

   

$

 

Stock option exercise cost included in accounts receivable

 

$

1

   

$

 

Conversion of preferred stock to common stock upon IPO

 

$

85,455

   

$